Is Ambuja Cements a Good Buy After the Merger of ACC and Orient into the company?

Synopsis:- The cement business is being consolidated into a single large platform with 107 MTPA capacity. A major brokerage sees 36% upside with a ₹750 target, supported by scale benefits, rising efficiency, and heavy capex that may turn net debt briefly before recovery by FY28.

India’s cement and cement product sector is a core building block of infrastructure and housing, making india the world’s second-largest producer. Annual cement production crossed about 440-450 million tonnes in FY24-25, growing roughly 5-7% year on year, supported by roads, urban infrastructure, and residential demand. Capacity now approaches 550-600 million tonnes, indicating headroom for future growth.

With a market capitalization of Rs 1,35,727.83 crore, the shares of Ambuja Cements Ltd closed at Rs 549.10 per share, increased around 0.50 percent as compared to the previous closing price of Rs 546.75 apiece.

Brokerage Recommendations

Motilal Oswal, one of the well-known brokerages in India, gave a ‘Buy’ recommendation on the cement stock with a target price of Rs 750 apiece, indicating a potential upside of 36 percent from Wednesday’s closing price of Rs 549.60 per share, reflecting more confidence after the merger announcement. Below are key reasons for the target

The Adani Group has announced a major restructuring to simplify its cement business by consolidating operations under Ambuja Cements Ltd (ACEM). The proposed merger of ACC Ltd and Orient Cement into ACEM will be done through share swaps with no cash outflow, valuing ACC at near-par and Orient Cement at a ~9% premium.

Earlier, the group had announced the amalgamation of Sanghi Industries and Penna Cement into Ambuja Cements (ACEM) and is currently awaiting regulatory approvals. Once effective, Sanghi shareholders will receive 12 ACEM shares for every 100 shares held, while eligible Penna Cement shareholders will be paid  Rs 321.5 per share in cash, simplifying the group’s cement structure.

Overall, Adani’s cement business has grown into a 107 MTPA powerhouse, highlighting its scale and reach. Ambuja Cements accounts for 57.6 MTPA, including Sanghi and Penna capacities, while ACC adds 40.4 MTPA and Orient Cement contributes 8.5 MTPA. The portfolio spans 24 integrated plants, 22 grinding units, and over 116 ready-mix concrete plants, strengthening nationwide presence and supply capability.

According to Motilal Oswal, the move is positive as it enhances scale, simplifies structure, and improves operational efficiency. The brokerage remains constructive, citing a balanced capacity mix and rising profitability, and values ACEM at 20x Sep’27E EV/EBITDA.

Further, the company’s net cash fell sharply to  Rs 25.6 billion in Oct’25 from  Rs 101.3 billion in Mar’25, largely due to heavy spending on capacity expansion and efficiency upgrades. It is expected to move into net debt during FY26–27 as capex peaks, before turning net cash positive again by FY28, backed by stronger operating cash flows from a larger scale.

Ambuja Cements for its strong brand, wide distribution network, and cost-efficient operations. Now part of the Adani Group, the company is expanding rapidly, focusing on scale, operational efficiency, sustainability, and strengthening its position in India’s growing infrastructure and housing markets.

The consolidation strengthens scale, streamlines operations, and sharpens cost efficiency, positioning the business for long-term growth. While near-term leverage may rise due to capex, improving profitability, strong capacity mix, and operational synergies support a positive outlook, reinforcing confidence in sustained value creation as demand from infrastructure and housing remains robust.

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